The U.S. stockpile of 1,269 tons of VX nerve agent stored at the Newport
Chemical Depot (Newport), Indiana, is one of nine stockpiles that the
Department of Defense (DOD) must destroy in response to congressional
direction initially provided in 1985. In addition, the stockpile must be
destroyed to comply with the requirements of the Chemical Weapons
Convention, which the United States became a party to in 1997. The
stockpile at Newport is the first U.S. stockpile containing VX that will
be destroyed by using neutralization--a process that mixes hot water and
sodium hydroxide (a caustic chemical) with VX to change the chemical
composition to a less toxic form. The resulting by-product is a liquid
wastewater commonly referred to as hydrolysate that consists mostly of
water but also has a caustic component and organic salts that need
further treatment to meet Chemical Weapons Convention requirements and
to meet federal and state environmental requirements for disposal. The
Army, DOD's designated executive agent, began neutralizing Newport's VX
stockpile on-site in May 2005 and, as of December 1, 2006, reports
neutralizing about 34 percent of the stockpile. None of the generated
hydrolysate--expected to be about 2 million gallons when the
neutralization process is completed--has been treated. The hydrolysate
is being stored on-site until a post-treatment plan can be implemented.
The Army has been evaluating options for treating the hydrolysate since
the mid-1990s. The John Warner National Defense Authorization Act for
Fiscal Year 2007 mandated that GAO review the Army's Cost-Benefit
Analysis of Off-Site Versus On-Site Treatment and Disposal of Newport
Caustic Hydrolysate. Specifically, GAO (1) assessed the reasonableness
of the Army's rationale to eliminate five of the eight technologies for
treating Newport's hydrolysate; (2) determined what other options the
Army considered, such as incineration; and (3) evaluated the adequacy of
the cost comparison analysis presented for the three remaining
technologies considered as alternatives to the Army's proposed plan. To
meet the December 1, 2006, due date, GAO briefed or offered to brief
your offices prior to that time. This report provides details of our
findings and our conclusions and recommendations. GAO will also issue a
separate letter on its assessment of the Army's cost-benefit analysis
once DOD has completed its sensitivity review of the data in that letter.

The rationale that the Army used to eliminate five of the eight
technologies for treating Newport hydrolysate appears reasonable. Based
on our review of the supporting post-treatment estimate report and key
National Research Council (NRC) reports referenced by the Army, there
was evidence of significant difficulties associated with the five
eliminated options that would make them less promising than the three
others that were evaluated against the proposed DuPont option in the
Army's cost comparisons. In addition to evaluating the eight
alternatives discussed in its 2006 cost-benefit report, the Army
previously evaluated off-site and on-site technical solutions for
treating the hydrolysate, including incineration. The Army's evaluations
concluded for various reasons that these alternatives would also be
difficult to implement or not viable at this time. However, 5 of the 7
firms would use either of two methods: incineration or deep-well
injection. Army officials believe that these two methods would garner
higher levels of public concern than other methods. Moreover, while
other on-site technologies were evaluated, those that were considered to
be the most promising technologies in the 2001 and 2002 reports are very
similar to the technologies identified in the Army's 2006 cost-benefit
report. The use of any of the Army's four incinerators at its stockpile
sites, while potentially technically feasible, has not been evaluated
because it also has the potential for high levels of public concern, but
could be evaluated if other options are no longer available. Based on
our assessment of supporting documentation and analyses, we determined
that the underlying cost estimates used in the Army's report were not
reliable, and the impact of this on the Army's report finding that the
DuPont plan had "significant cost savings" over the three considered
alternatives is uncertain. Using OMB criteria and criteria approved by
the cost estimating community, we determined that the estimates were
unreliable because of (1) the quantity and magnitude of errors, (2)
quality control weaknesses, (3) questionable or inadequate supporting
source data and documentation, and (4) the undetermined sensitivity of
key assumptions. Neither the Army nor the contractor has a system in
place to perform cross-checks of the costs, underlying assumptions, or
the technical parameters that went into the estimates. Moreover, we have
determined that the results from the Army's programmatic risk analysis
are unreliable because they were generated from the previously discussed
unreliable cost estimates and because the Army attributed no risk to
potential permitting, legal, or other challenges to the DuPont plan.
Overall, we could not determine the cumulative effect of these problems
on the outcome or results of the Army's analysis, in large part because
we did not have confidence in much of the supporting data because of the
problems that we have noted. Nevertheless, without reliable underlying
cost estimates, the Army, the Congress, and the public cannot have
confidence that the most cost-effective solution has been selected.

For the original version of the summary as well as a link to the full
report, go to